Essays on investment and technological adoption

by de Oliveira Cruz, Bruno

Abstract (Summary)

The aim of this Thesis is to study the relationship of investment decision with technological progress and the adoption of new technologies. In more specific, the main focus is given to some policy experiment. This dissertation is divided in 4 chapters, including the introduction and the review of the literature:
· The Second Chapter deals with the impact of productive public capital on the decision to invest, taking into account irreversibility and uncertainty. Many authors have stressed the importance of the Government as ultimate risk manager. On the one hand, there is an extensive literature on how public expenditure affects growth. The purpose of the chapter is to take another perspective: to study if the productive public capital can reduce the risk faced by the private sector, in the presence of irreversibility and uncertainty. Thereby, we want to emphasize the stabilizing role for the public capital.
· The Third Chapter: introduces a theoretical link between embodied technological progress, the irreversibility and uncertainty literature. In this model, Replacement is postponed in the presence irreversibility and uncertainty. The age of the oldest machine evolves stochastically. Firms can invest even if they are not using all the units, getting rid from the perfect procycle models in the irreversible literature. Furthermore, we reproduce the empirical evidence at firm level: investment is lumpy and infrequent.
· The Fourth Chapter studies the impact of public policies aiming at the reduction of the adoption cost of new technologies. We assume an economy that presents AK production function with two distinct features: the adoption of new technologies is costly and embodied in new machines, and there is diffusion and learning process.
Studying how technological progress, uncertainty and irreversibility affect the decision to undertake new projects and the acquisition of new equipments by private sector, we expect that this Thesis can contribute not only with academic debate but also with the efficiency of public policies.